Home » Mini Tried To Ditch Dealers And It Turned Into A ‘Disaster’

Mini Tried To Ditch Dealers And It Turned Into A ‘Disaster’

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People often view dealers as on the side of automakers in a transaction, but the last couple of years have been dominated by dealers pushing back against their brands, often for the at least incidental benefit of consumers. None of this is black-and-white, of course, though it’s likely more strategic if you go into a purchase or warranty claim with the goal of working with the dealer to get a better deal at the expense of the automaker.

I mention this because, of course, Tesla showed that it was more profitable to skip the dealership experience. Is Tesla the rule or the exception to it? European automakers have been attempting an “agency” model to try and augment dealers, similar to how Hyundai is trying to work with Amazon to drive sales. So far it’s been a failure.

Vidframe Min Top
Vidframe Min Bottom

If you read The Morning Dump regularly you know it’s not like Germany needs any more automotive failure. The three big German automakers had a rough year and now Chinese automakers are sniffing around Volkswagen factories in Germany. It makes sense, right? At the same time, China is raising retaliatory tariffs against Europe and the United States.

And, finally, the Feds made a deal with Toyota over diesel emissions cheating. That’s right! Dieselgate never ends.

Mini And The Agency Problem

P90567040 Highres Mini Cooper S Conver
Photo: Mini

Automakers seem to be enamored with the idea of transacting directly with consumers, yet, for all their efforts it doesn’t seem to work. Audi bought the rental agency Silvercar, only to shutter it. Cadillac, Porsche, Volvo, and many others attempted a so-called ‘subscription model’ for car ownership, only to abandon those projects.

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Hyundai is trying to get dealers into cars via Amazon, which has sort of worked, though all of those customers do still end up at a dealer. For traditional automakers, state franchise laws mean it’s almost impossible for them to completely ignore the existing dealer network. The idea that Volkswagen might sell Scout and Honda might sell Afeelas directly to consumers has dealers revolting.

In Europe, companies have tried to use an agency model that outsources some sales, mostly to online portals. Dealers in this model have less work to do as the customer comes to pick up the car with the details of the deal worked out, but dealers also make less money.

It hasn’t been working. Here’s Cox Automotive on the logic of it all:

The pitch for agency was that it would allow established OEMs to cut their cost of distribution in half to match the reported 15% level of Tesla, with ‘fixed’ or ‘transparent’ pricing preventing dealers from ‘giving all our money away’. This is wrong on every count.

Tesla probably did have a much lower cost of distribution until around 2021, but that was when there was very limited choice of premium BEV product and capacity still lagged demand. That has now changed, and Tesla has repeatedly slashed prices in a highly visible way and now sells from inventory rather than from the order pipeline. Its volumes have dropped for each of the last two quarters, and it has slashed headcount by 10%. It has become ‘normal’.

Cox’s Steve Young blames consultants for dangling the idea of savings in front of automakers, who jumped at the idea without actually taking the many important steps necessary to make it work. Here’s the other issue:

The almost universal problem with agency implementations to date is that OEMs continue to push excess supply into the market, and they have not developed new pricing mechanisms that allow them, or the retailers on their behalf, to achieve a matching demand. Beyond the unlikely scenario of OEMs following a strategy of matching supply to real demand, the theoretical answer is a sophisticated, centralised dynamic pricing approach that adjusts the offer continuously through promotions and deals that result in a supply-demand balance on each model line to meet the targeted volume. This is effectively a more precise approach to metering out how variable marketing funds are applied compared to current approaches that often result in knee-jerk reactions that result in deep discounts in some fleet channels and pre-registrations by retailers.

Carmakers are going to carmaker, and there are reasons why a company will continue to produce a car even if it ends up not being exactly what the market wants. See: Almost every car Nissan and Stellantis sold last year.

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Ford planned to do an agency model, and then changed its mind. Volkswagen and Audi had to apologize for how much chaos the model caused in Europe.

BMW’s 2024 wasn’t as bad as the one Mercedes or Volkswagen had, and BMW even managed to improve its electric car sales. One obvious weak spot was Mini, which saw sales decline by 17.1%.

Why? From Manager Magazine (translated):

The brand has “renewed its entire portfolio” in 2024, it simply says. Model changes can cause dents in sales figures. Production of the old vehicle is being scaled down, and the new one is not initially being built at top production speed. Mini also had production problems during the year, and in the first half of the year dealers complained about too few cars being available. This explains some of Mini’s lean months in 2024.

But a closer look at the statistics reinforces the impression: The brand, which has a winged wheel as its logo, crashed last year for other reasons.

Dealers are happy to point out that Mini’s attempt at an agency model isn’t helping:

It is often the details that are annoying. The purchasing process has become too complicated for customers, complains one dealer. For example, they have to register again with BMW even if they have been buying cars from their dealer for many years. Mini demands too much from prospective customers, confirms another dealer: “The customer does not want to answer 1000 questions before he gets his car. He has not had to do that before.” His salespeople “don’t want to be the buffers.”

Obviously, this is mostly from the dealer perspective and a lot of the problems seem solvable, of course, as the rollout of any new and complex system isn’t going to be smooth. If the sales model is aligned with the production model then maybe it can work, but that’s a big maybe. As one dealer said about BMW’s move to make all sales via agency in 2026 in Germany: “We cannot afford a disaster like the one at Mini.”

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Chinese Companies In German Plants Make Sense

Volkswagen Plant Wolfsburg, Golf Production
Photo: VW

Germany was one of the countries that didn’t vote for EU tariffs, presumably because German companies really need China as a market. This is tough for Volkswagen, which made a last-minute deal to avoid plant closures in spite of financial headwinds.

What will happen to our poor VW worker, pictured above, in the future? One outcome, according to a source familiar with the thinking of the Chinese government who spoke to Reuters, is Chinese car companies moving into these plants:

Buying a factory would allow China to build influence in Germany’s prized auto industry, home to some of the oldest and most prestigious car brands, the person said.

Chinese companies have invested across a range of industries in Germany, Europe’s biggest economy, from telecommunications to robotics but have yet to set up traditional car manufacturing there, despite Mercedes-Benz having two large Chinese shareholders.

Any such move could mark China’s most politically sensitive investment yet. VW has long been a symbol of Germany’s industrial prowess, now threatened by a global economic slowdown hitting demand and a creaking transition to green technologies.

Yeah, it’s not a great look for Germany as an industrial powerhouse, but there’s a lot good here for Volkswagen potentially. It can be the beneficiary of EU tariffs it voted against, as a plant within the EU building BYD Seals won’t be subject to those tariffs. It reduces the company’s overhead and I’m sure VW could get a good deal for its plants.

China Has One Word For The West: Plastics

Europe, Taiwan, Japan, and the United States have all been variously antagonistic towards China when it comes to trade. Whether you think that’s fair or not will depend a lot on which side of the Taiwan Strait you find yourself on.

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In response, China is launching a series of retaliatory tariffs according to Reuters via Nikkei:

China said on Thursday it would apply provisional duties on imports of industrial plastics from the United States, European Union, Japan and Taiwan after a months-long anti-dumping investigation.

The provisional anti-dumping levies on polyacetal copolymers range from 3.8% to 74.9% depending on the country and company and will commence from Jan. 24, the Commerce Ministry said in a statement.

China launched the investigation in May, the same week that the U.S. hiked tariffs on Chinese electric vehicles and the European Union launched a trade investigation into certain Chinese steel imports.

All governments are establishing a starting point for negotiations with the United States and Trump, so we’ll see if the President-elect can work a deal.

Toyota Settles Its Own Dieselgate

Hini Motors Truck

I don’t think about Hino very often as we don’t regularly cover big trucks here, but you’re probably surrounded by vehicles powered by motors made by the Toyota subsidiary. While most of the attention was paid to Volkswagen for its “Dieselgate” emissions cheating scandal, most automakers that sold diesel-equipped vehicles globally had to admit to at least some small amount of malfeasance.

And, now, it’s Toyota’s turn. The company will have to pay $1.6 billion in a settlement with the US EPA. What did they do? Cheated on the tests.

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Here’s what the Feds had to say:

“Hino knew the requirements that engines must meet to be certified to operate in the United States, yet it falsified data for years to skirt regulations,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division (ENRD). “Hino’s actions led to vast amounts of excess air pollution and were an egregious violation of our nation’s environmental, consumer protection and import laws. Today’s plea agreement and civil settlements, on behalf of myriad federal entities, mark the Justice Department’s commitment to protecting our environment and holding companies accountable for corporate wrongdoing.”

“Corporate crimes such as these endanger the health and well-being of innocent Americans, as well as the environment in which we all live,” said U.S. Attorney Dawn N. Ison for the Eastern District of Michigan. “My office is committed to aggressively seeking justice when corporate actors violate air quality standards and place our community at risk in order to increase their sales.”

In addition to paying the funds and recalling some vehicles, Hino is prohibited from important engines for five years.

What I’m Listening To While Writing TMD

Ok, let’s do The Roots again. This time it’s from my favorite album “Things Fall Apart” and it’s “You Got Me” featuring the incomparable Erykah Badu. Also, what is it with videos having people lying on the ground?

The Big Question

Do you want to buy your next car entirely online?

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Strangek
Strangek
59 minutes ago

I would totally buy my next car entirely online, especially if I’m shopping new. Dealerships are a stressful part of the buying experience.

Fuzzyweis
Fuzzyweis
1 hour ago

I thought the CARS rule was supposed to help with the shady dealer shenannigans. The fact they had to make the CARS Rule should already be an argument in the manufacturer’s corner for bypassing the dealership model.

I do appreciate being able to see cars in person and sit in them, even the local auto show is put on by the local dealer association, it let me see that I am in fact not comfortable in a RAV4, but strangely the smaller sized Escape or Kona was fairly comfy.

The last time I did buy a car from a dealer though I did get some crap I didn’t want(the ceramic coating package which clearly was not applied to the car, which was used, and already had scratches, so wth?) But supposedly they couldn’t remove it. Was pandemic times and prices were already starting to shoot up so got what I could get but maybe the Carvana route would’ve been better.

John in Ohio
John in Ohio
1 hour ago

The only thing I want to go to the dealer for is to test drive or for service. I don’t want to buy from them any longer. I’m still one of those people who need to drive the vehicle I’m interested in buying.

Joke #119!
Joke #119!
1 hour ago

Do you want to buy your next car entirely online?

If it takes three hours of waiting for the AI to ask its manager AI about my price, coming back and offering me lifetime wiper blades or some other shit, then no.

If it takes two minutes (after I’ve done the homework that I would already do) and I can chop off some amount from the price because no middle man is getting paid, then sure. I also will want a specific color, manual, wagon-shaped small car similar to my own, and I’m willing to wait for it. Will I get it? No. I’ll probably settle for some EV that my wife wants and I will get her boring car. Then I die. The end.

FndrStrat06
FndrStrat06
1 hour ago

What I want is a straightforward transaction. Walk in, buy/finance/lease a car for the advertised prices, sign paperwork, and leave in 30 minutes.

No arguing with sales ghouls, no hidden fees, no nonsense upsells, no rug pulls.

Whatever carmakers and dealerships want to do to make that happen, whether it’s direct sales, or overhauling their dealer network, so be it.

Cheap Bastard
Cheap Bastard
1 hour ago

“Do you want to buy your next car entirely online?”

Sure.

I think something like Hertz’s Rent2Buy and/or 7-day/250 Mile Buy Back Guarantee would go a long way to alleviating concerns.

The Stig's Misanthropic Cousin
The Stig's Misanthropic Cousin
1 hour ago

I’m not interested in buying 100% online. I enjoy test driving different vehicles. I’m not willing to give that up, even if it means skipping some of the dealer BS.

I presume dealers actually want people like me to buy online, even if it reduces their profits. Most of my test drives end with me deciding to keep my old vehicle.

Last edited 1 hour ago by The Stig's Misanthropic Cousin
Borton
Borton
1 hour ago

Same. I drove at least five cars when I bought my last one. I think there’s only ever been one time in my life I walked into a dealer knowing I was leaving with a new car, and I had driven the same model a couple years earlier.

C Mack
C Mack
38 minutes ago

Ditto – I bought a Bronco because of it…..I’ve never owned any sort of truck/heavy SUV and just went in on a whim to do a quick test drive and completely fell in love. And yeah, plenty driven in the past where I realized grass wasn’t greener.

Way too big of a purchase to go by reviews/brochures alone

John Patson
John Patson
1 hour ago

Still are an amazing number of mainly French diesel cars which, when you turn on the ignition, floor the accelerator twice, and then start the engine, go into special “test” mode, which, among other things limits revving and so about of gas going out the back…

Rollin Hand
Rollin Hand
1 hour ago

I likely will never do the whole thing online. Simple ergonomics questions (does my big ass fit?) need answers as does whether I like driving the thing. Feel is incredibly important to me, and I’ll know when I have the right vehicle.

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